German US Investment Falls to US$5 Billion, a Three-Year Low

Germany · INVESTMENT

German US investment drops to a three-year low

German companies invested €4.3 billion (US$5.0 billion) in the United States in the first half of 2026. The German Economic Institute (IW) in Cologne calculated the figure from Deutsche Bundesbank data.

That is the lowest first-half level since 2023 and nearly 80 percent below the same period in 2024.

The decline is not a retreat from existing operations. Reinvested profits and loans to US subsidiaries were exceptionally high, while new equity capital stayed below average.

Sultan says the fall continues a downward trend seen since Trump’s second term began in January 2025. “Companies that are already active in the United States are therefore continuing to reinvest the profits they earn there,” she said.

In the five years before COVID-19, first-half German investment in the US averaged €15.8 billion (US$18.3 billion). That is almost four times the 2026 figure.

Why German US investment stalled

From February to November 2025, German firms invested €10.2 billion (US$11.8 billion) in the US. That was about 45 percent below the nearly €19 billion (US$22 billion) of a year earlier.

IW’s report “One year of Trump 2.0: A bitter reckoning”, published on 20 January 2026, blames the US administration’s often erratic actions. Investment planning usually spans several years, so firms wait rather than commit.

Since 21 August 2025 the United States has applied a 15 percent tariff ceiling on most European Union goods. IW puts the average effective US import tariff at 14.4 percent.

An ifo Institute survey published on 22 July 2026 found about a third of industrial firms postponing US investment projects. The share cancelling projects nearly doubled to 16 percent.

Exports and manufacturing feel the strain

German exports to the US fell 8.6 percent between February and October 2025, IW found. That was the steepest drop since 2010, excluding the pandemic.

Cars and parts fell almost 19 percent, machinery about 10 percent and chemicals more than 10 percent. Exports to the US reached €74.4 billion (US$86.1 billion) in the first half of 2026.

The US remains attractive, but less dominant

Sultan says firms already active in the United States keep reinvesting the profits they earn there. She adds that this suggests the US remains an attractive market overall.

The German American Chambers of Commerce found 67 percent of German subsidiaries planning higher US investment in 2026. Their survey of 6 March 2026 also found 56 percent intending to invest at least US$1 million.

In the same 2026 survey, 86 percent of German subsidiaries reported negative effects from US tariff policy. A year earlier 81 percent had only expected tariffs to affect them.

German capital pivots toward Asia

China rose to 34 percent from 31 percent, and the Asia-Pacific region to 26 percent. DIHK foreign trade chief Volker Treier said the US trade dispute is making companies postpone decisions.

Losses on both sides of the Atlantic

IW says the pullback also hurts the United States, through weaker investment and slower factory expansion. The European Union has not retaliated: on 31 July 2026 it again suspended counter-tariffs on €93 billion (US$107.6 billion) of US goods.

German firms are instead delaying projects and spreading investment across other markets. IW concludes that the record of Trump’s second term is bitter for both sides of the Atlantic.

What this means for Mercosur

Germany is pulling back from a market where its effective tariff has risen to about 15 percent. In the same year, a market of 260 million people went largely duty-free.

The European Union’s interim trade deal with Mercosur took provisional effect on 1 May 2026. It removes tariffs on 91 percent of trade between the two blocs.

German cars, machinery and pharmaceuticals previously faced Mercosur duties of 14 to 35 percent. Brazil’s Senate ratified the agreement on 4 March 2026.

German trade with Mercosur passed €26 billion in 2024, about US$30.1 billion. German direct investment in the bloc topped €35 billion in 2023, about US$40.5 billion.

Frequently Asked Questions

How much did German companies invest in the US in the first half of 2026?

German companies invested €4.3 billion (US$5.0 billion) in the United States in the first half of 2026. That is the lowest first-half level since 2023.

Why are German companies cutting US investment?

Policy uncertainty under Donald Trump’s second term is holding back decisions on new projects. IW blames erratic US actions, alongside a 15 percent tariff on most European Union goods.

Are German companies leaving the US market entirely?

No. Reinvested profits and loans to US subsidiaries were exceptionally high, while new equity capital for factories and expansions stayed below average.

Sources

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.